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CMHC Report - Canada’s Housing Market to Remain Steady

CMHC (Canada Mortgage and Housing Corporation) just released a report this morning on their forecast for the National Housing Outlook.

At the national level, sales of existing homes through the Multiple Listing Service® (MLS®) declined in the second quarter of 2011 and are forecast to remain stable in the remaining quarters of 2011. MLS® sales are expected to increase modestly in 2012. Overall, 446,700 sales are forecasted in 2011, followed by 458,000 in 2012. As for national resale prices: the average MLS® price in the second quarter of 2011 continued to increase but is expected to plateau for the remainder of the year. For 2011, the national average MLS® price is forecast to be $367,500 while 2012 will see a modest increase to $372,400.

In 2012, growth in housing starts is expected to be strongest in Alberta and British Columbia.

For the Alberta market, here are the key items:

Elevated oil prices will continue to be the foundation of economic growth in Alberta. Crown land sales of petroleum and natural gas rights are on pace to exceed the record set in 2010. Total drilling activity is showing significant growth from last year with gains in oil outweighing the decline in natural gas. The oil sands in Alberta will continue to attract investment and generate economic growth beyond 2012. Energy exports will help generate a trade surplus. Meanwhile, consumer spending is expected to rise this year and next. Under these conditions, Alberta’s real GDP is projected to grow by 3.3 per in 2011 and then increase by 3.6 per cent in 2012.

Employment is expected to continue trending higher with Alberta’s expanding economy and will surpass the peak level of employment prior to the economic downturn later this year or in 2012. Employment growth is expected to be near 2.8 per cent this year, with growth above two per cent in 2012. The unemployment rate in Alberta has been under six per cent this year and is forecasted to trend lower through 2012. A rising participation rate will keep the unemployment rate near 5.6 per cent in 2011. By 2012, employment growth will reduce the unemployment rate to 5.1 per cent.

An improving economy will draw more people to Alberta and lift housing demand. Interprovincial migration will be the key driver of migration gains this year, as international migration into Alberta is projected to be relatively stable. An improving labour market will stem the outflow of non-permanent workers. Overall, after two years of decline, net migration is projected to rise to 29,000 people in 2011, and then increase further to 32,000 in 2012.

For Resales: Economic growth and improving migration patterns are supporting housing demand in Alberta. Resale markets in Alberta have generally experienced a higher level of sales. In 2011, resale transactions will grow by over three per cent to 51,300 units. Higher carrying costs next year will negatively impact sales but stronger migration patterns will help lift MLS® sales to 53,100 in 2012.

For Prices: Market conditions that favoured the buyer in 2011 will limit price growth this year. By year-end, the annual average price in Alberta is projected to rise by almost one per cent to $354,800. Housing market conditions across Alberta are expected to experience improved market balance over the remainder of the forecast period as new listings decrease and sales increase. This improvement to market balance in 2012 will cause prices to rise by 2.3 per cent to $363,000.

For the complete CMHC Third Quarter 2011 Report with the national and regional details, click here.

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Data supplied by CREB®’s MLS® System. CREB® is the owner of the copyright in its MLS® System. The Listing data is deemed reliable but is not guaranteed accurate by CREB®.

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